Exam 5: Competitive Rivalry and Competitive Dynamics

A firm is likely to respond to an attack by a competitor in all of the following situations EXCEPT

Extensive market commonality guarantees intense competition in an industry.

What is market commonality? What is resource similarity? How are these concepts combined to identify the level of competition between two firms?

Without quality, the firm's products

The success of HP's launch of a laptop computer sold through Best Buy with a main differentiating feature of the case being silver and white instead of the standard black is an indication of what?

Boeing's decision to commit the resources required to build the super-efficient 787 midsized jetliner is an example of a tactical action.

The more dependent a firm is on its market, the more aggressively it will defend it from another competitor.

Case Scenario : Romulac, Inc. Romulac Inc. (RI), a subsidiary of a large successful manufacturing conglomerate, supplies a key component in the assembly of residential cooling systems (air conditioning units, etc.). There has been tremendous consolidation in RI's industry, to the point where only five suppliers of this particular component account for nearly 90% of U.S. industry sales. Paralleling this trend, its customers - comprised of makers of branded residential air conditioning units like Carrier and Trane - have seen similar levels of consolidation in their own industry. Half of these firms produce all their components in-house, while the balance purchases them from specialized component manufacturers like RI. RI's business is extremely capital intensive, and their 40% share of the market allows them to also be the most profitable domestic player. Strong competitors exist in Europe and Asia. Although like RI, these foreign players' strongholds are their home regions, with negligible presence outside of the region. Some of the larger Asian manufacturers have signaled an interest in more aggressively pursuing the lucrative U.S. market. RI is presently considering a $400 million dollar investment in a new plant, which will create a component that is much quieter, more efficient, and is likely to satisfy future regulatory standards. While the core technology for the new component is very old, RI's engineering and design skills have allowed them to retain their low cost-advantage, even though the component will represent a significant improvement over products currently provided by its competition. -(Refer to the above Case Scenario ) Develop an argument as to why RI should try to be a first-mover with this new technology.

The benefits of being a first mover are most substantial in fast cycle markets.

Define slow-cycle, fast-cycle and standard cycle markets.

Research suggests that a firm with greater multimarket contact is less likely to initiate an attack, but more likely to respond aggressively when attacked.

A firm that is LEAST likely to launch competitive actions is one that has

Which of the following is TRUE of Wal-Mart?

Traditionally, the music industry signed multi-year contracts with artists and sold copyright protected music through established distribution channels. A shift to the digital format and the rise of Internet technology has resulted in the sharing of music over peer-to-peer networks, a practice the industry called "piracy." In recent years, the music industry has seen a rapid decline in the number of CDs sold. At the same time, the ownership of the distribution rights of musical content under copyright laws remains clear. Attempts at innovation by individual record labels to offer music as direct downloads to consumer are quickly copied by other labels. Based on these factors, the best assessment is that the music industry has shifted from a ____ to a ____ cycle market.

According to the Strategic Focus about Wal-Mart, Target has been successful by positioning itself as an upscale discounter to avoid direct competition with Wal-Mart.

Firms are likely to imitate the actions of a competitor that is noted for risky, complex, and unpredictable behavior because this is a way to imitate unobservable core competencies.

The need for quality products and services is so high that quality alone can assure a firm that it will achieve strategic competitiveness and earn above-average returns.

In the Chapter Strategic Focus, Hershey responded to premium product introductions by competitors such as Godiva and Cadbury with a premium line of its own, Bliss chocolates. These are examples of actions and responses in a standard-cycle market.

In general, compared with firms which compete in only one market, among firms which face one another in multiple markets there is

An organization with high profitability, such as Wal-Mart, will be able to develop high organizational slack.